Startup Opendoor has just joined the long list of real estate tech startups with backing from SoftBank.
The Japanese conglomerate’s Vision Fund just invested $400 million in the home-flipping company, Opendoor announced Thursday. The funding round also coincides with additional debt from a consortium of banks, which brings the company’s total financing to $2 billion.
“We’re excited to widen our ambitions as we launch new products, expand our services, and build an end-to-end experience for millions of people moving each year,” Eric Wu, founder and CEO of Opendoor, said in a statement.
Since its launch in 2014, the San Francisco-based company has expanded its offerings in 19 cities — with a goal of growing in 50 markets by 2020. It’s currently in Austin, Chicago, Los Angeles, Houston and Orlando to name a few.
SoftBank’s investment brings Opendoor’s total equity raised to $1.045 billion, the company stated. It’s also fresh off a $325 million Series E, which closed in June. That funding round was co-led by General Atlantic, Access Technology Ventures and Florida-based home builder Lennar Corp., which Opendoor already has a partnership with. At the time, Opendoor was said to be looking for up to $200 million from investors at a $2 billion valuation.
Before that, Opendoor’s last funding round was $210 million in November 2016, though Fifth Wall and Lennar provided $135 million in debt and equity in late 2017.
Earlier this month, Opendoor put its funding to work with the acquisition of Open Listings, a company that offers homebuyers a 50 percent rebate on a buyer’s agent commission. The move means Opendoor will employ buyer’s agents and work with agents from other brokerages.
SoftBank has poured billions into tech-focused startups through its Vision Fund in recent years. Its head Masayoshi Son has taken a particular interest in real estate startups, having provided $4.4 billion to WeWork last summer — though there’s said to be more on the way — and $450 million in Compass late last year.
The Vision Fund has $100 billion to spend. At a conference this summer, Justin Wilson, an operating partner at the company, said that since real estate represents about 17 percent of the U.S. economy, SoftBank would be looking to invest “at least somewhere around that size and scale.”
The real estate prince maker’s investment in Opendoor isn’t just another means of finding returns: it’s emblematic of the industry’s iBuying frenzy. Home-flipping rates hit a six-year high during the first quarter of 2018, according to ATTOM Data Solutions. New York City alone saw a 20 percent year-over-year increase. That said, home flipping has become Wall Street and Silicon Valley’s latest darling.
And it’s not just startups dominating the iBuying world. Major real estate companies like Zillow have already jumped on the bandwagon. On Monday, Realogy announced it would launch an all-cash program for subsidiary NRT’s Coldwell Banker.